Samsung, Inc., an established and successful firm, secures a bank loan to finance a new facility. The interest rate on this loan is 3 percent. Newburger Co. is a new entrant into the the Omaha restaurant market, an historically risky and volatile market to compete it. It secures a loan to finance its startup costs from the same bank. The rate on this loan however is 11 percent. This is an example of

Samsung, Inc., an established and successful firm, secures a bank loan to finance a new facility. The interest rate on this loan is 3 percent. Newburger Co. is a new entrant into the the Omaha restaurant market, an historically risky and volatile market to compete it. It secures a loan to finance its startup costs from the same bank. The rate on this loan however is 11 percent. This is an example of

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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(a) Suppose Fiat recently entered into an Agreement and Plan of Merger with Case for $4.3 billion. Prior to the merger, the market for four-wheel-drive tractors consisted of five firms. The market was highly concentrated, with a Herfindahl- Hirschman index of 2,765. Case's share of that market was 22 percent, while Fiat comprised just 12 percent of the market. If approved, by how much would the postmerger Herfindahl-Hirschman index increase?
You are the manager in a market composed of 12 firms, each of which has a 8.33 percent market share. In addition, each firm has a strong financial position and is located within a 100-mile radius of its competitors. Instructions: Enter your responses rounded to the nearest penny (two decimal places). a. Calculate the premerger Herfindahl-Hirschman index (HHI) for this market. b. Suppose that any two of these firms merge. What is the postmerger HHI? c. Based only on the information contained in this question and on the U.S. Department of Justice Horizontal Merger Guidelines described in this chapter, do you think the Justice Department would attempt to block a merger between any two of the firms? O It may but will also consider other factors O It likely will not O It likely will
Assume Allergan, Inc. is facing a capacity constraint in manufacturing Botox®. Analytically, this implies its marginal cost curve is extremely steep. As Botox® is oftentimes used for cosmetic reasons, it is reasonable to assume consumers have quite elastic demand curves. Hypothetically, assume a forthcoming study will highlight the safety of Botox® for cosmetic procedures. Given this potential study, where should Allergan, Inc. focus its strategic resources? a. Operations, specifically finding ways to lower costs in an effort to justify a price increase. b. Staffing, specifically preparing to significantly increase its staff to prepare for a large increase in the number of units of Botox® sold. c. Marketing/Pricing, specifically preparing to significantly raise the price for Botox®.
What are the strengths of Alibaba Group: The Rise of a Platform Giant?
Question 5 In a given market the inverse demand function is P = 170-Q per year. The interest rate is r = 0.05 and the cost structure of a firm is given by C(q) = 80 q. Now assume that originally there was a Cournot duopoly in the market (with equal costs) and that it would be too costly for the research institute to enter the market. Answer the following: If the research institute sells an exclusive license at a fixed annual fee L to firm 1 (with the threat of going to the other firm if firm 1 rejects the offer), then The optimal annual fee is 1,600 and profits for firm 1 and 2 are 900 and 400 respectively. The optimal annual fee is 1,600 and profits for firm 1 and 2 are 900 and 900 respectively. The optimal annual fee is 2,100 and profits for firm 1 and 2 are 400 and 900 respectively. The optimal annual fee is 2,100 and profits for firm 1 and 2 are 400 and 400 respectively.
Which of the following statements regarding business ethics is NOT correct? According to Bagley in The Ethical Leader's Decision Tree, directors' obligation is to manage the corporation "for the best interests of the corporation", which might not be “maximizing shareholder value" all the time. According to Bagley in The Ethical Leader's Decision Tree, when there is no established ethics policy, directors can turn to their company values statement for guidance about what constitutes ethical business behavior. According to Epley and Kumar in How to Design an Ethical Organization, a better way to manage ethics is to design workplace context that encourage good behavior. Keeping prosocial values top of mind for employees as they make decisions will reduce the likelihood of transgressions. According to Epley and Kumar in How to Design an Ethical Organization, the "tone at the top" is a much more significant driver of employees' behavior than "tone in the middle".
Rayz, Inc., competes against many other firms in a highly competitive industry. Over the last decade, several firms have entered this industry and, as a consequence, Rayz is earning a return on investment that roughly equals the interest rate. Furthermore, the four-firm concentration ratio and the Herfindahl-Hirschman index are both quite small, but the Rothschild index is significantly greater than zero. Based on this information, which market structure best characterizes the industry in which Rayz competes? Explain
Question 2 Two laptop producers, Micron and Mega, are considering producing a new model of laptop which requires heavy investment. If both produce, both will incur a loss of $100 million. If only one produces, it will earn a profit of $200 million and the other which does not produce will earn a profit of $20 million. If both do not produce, both will earn a profit of $50 million. If Micron gets to make a decision first, apply the sequential game concept, construct a decision tree diagram, explain and solve for the solution using a roll-back method. Full explain this question and text typing work only We should answer our question within 2 hours takes more time then we will reduce Rating Dont ignore this line
Most of Australia’s coal-fired power plants are running at a loss as electricity prices continue to slide, battering the profits of energy giants AGL and Origin and sparking warnings from within the industry of earlier-than-expected plant closures. An influx of renewable energy has been driving down daytime electricity prices and piling enormous pressure on the nation’s fleet of coal-fired power stations, which are far more expensive to operate and, increasingly, struggling to compete. New figures reveal baseload electricity prices in Victoria crashed 70 per cent from about $80 a megawatt hour in March 2020 to $24 this month… Price falls across the nation’s main grid have been driven largely by the pandemic-led downturn in energy demand, a cooler-than-usual summer and the accelerating rollout of rooftop solar panels. While demand is recovering, the flood of cheap renewable energy continues. With four gigawatts of new wind and solar already committed to enter the grid between 2021-23…
IKEA is one of the most well-known home furnishing brands in the world. The Swedish furniture has its production operations based mainly in Europe including Poland, Russia and Sweden. Its only non-European manufacturing plant in Virginia, the United States has been shut down in 2019 due to the cut of production cost. Nevertheless, due to the growing demand of DIY home furniture in the Asian markets, IKEA is considering the necessity to open new manufacturing plant in Indonesia to support the emerging demand. Use the following criteria to make suggestion whether the company should concentrate or decentralise its manufacturing operations based on; 1. Differences in political & economic system 2. Technological factors (i.e. fix cost, minimum efficient scale) 3. Product factors (i.e. value-to-weight, serve universal)
Assuming Company ABC currently holds the largest market share in a town, making it the dominant player. Its only competitor, Company XYZ, sells a similar product but has a smaller market share. Presently, ABC earns a profit of $1,800, while XYZ earns $1,200. ABC is now confronted with a challenge: its rival, XYZ. is signaling a potential price reduction to attract more customers. ABC has two strategic options: lower its price or maintain the price. If ABC reduces its price before XYZ does, it could potentially increase its profit to $2, 000, while XYZ might see its profit halve. However, if both ABC and XYZ lower their prices, leading to a price war, ABC's profit could drop by $200, and XYZ's profit could decrease by $300. On the other hand, if ABC chooses to retain its current pricing while XYZ reduces its price, ABC's profit might decline to $1.300. Meanwhile, XYZ could potentially attract more customers and increase its profit to approximately $1, 500. Illustrate the market…
Philippines You're the manager of global opportunities for a U.S. manufacturer that is considering expanding sales into Asia. Your market research has identified the market potential in Malaysia, the Philippines, and Singapore as described in the following table: Malaysia Probability Units Philippines Probability Units Singapore Probability Units Big Success Level 0.3 1,100,000 0.3 1,300,000 Mediocre Failure 0.2 352,000 0.3 650,000 0.1 0.7 600,000 360,000 0.5 0 0.4 0 0.2 0 The product sells for $20, and each unit has a constant marginal cost of $16. Assume that the (fixed) cost of entering the market (regardless of which market you select) is $500,000.